Monday, October 5, 2009

The Trouble with Tort Reform - Part 1

One idea for fixing the access to healthcare/medical insurance issue in this country is to simply enact sweeping tort reform.

The logic is this:a) You limit the amount of “pain and suffering” damages plaintiffs can receive to a quarter of a million dollars. (Research indicates this is the optimum amount.)b) This, in turn, trims both malpractice premiums and “defensive medicine” costs andc) Voila! Problem fixed!

Unfortunately, there are a few problems with this approach:

1) Malpractice premiums represent only 2% of the healthcare costs in America.2) Malpractice premiums are primarily affected by two factors:a. Number of claims/anticipated claims for a specialty (unlike car insurance, doctors aren’t generally rated for malpractice premiums based on past claims, because past claims are not, statistically, an indicator of future claims).b. How well the malpractice insurance company did in the stock market the previous year.3) “Defensive medicine,” that is, the practice of running unnecessary tests and procedures, is not strictly defensive. Doctors are paid by insurance companies and by Medicare/Medicaid for each service, so they make more money if they do more tests.

The thing that’s especially interesting about that is, because every medical procedure is an opportunity for another medical error, running more tests/ performing more procedures actually yields worse outcomes. The Mayo Clinics in Rochester, MN and Jacksonville, FL have some of the lowest Medicare costs in the country and they also have the best outcomes.

As for the $250,000 limit on pain and suffering, I’d like to share this story.

A number of years ago, the pastor of my church went in for a routine laparoscopic procedure on his gall bladder. During the procedure, the surgeon accidentally nicked his aorta. For the next few hours in recovery, he bled and no one noticed, which damaged his internal organs. When he awoke a week later, they told him it was unlikely he’d ever walk again.

He did not sue the hospital, because, he said, Christians don’t sue people over mistakes. They forgive them. (Gotta love someone who can walk the talk.) And the entire church prayed for him, and he put a lot of energy into physical therapy, and he did walk again.

But my thought is this: if he had never recovered, would $25,000 a year for the next ten years been reasonable compensation for a man in his early 40’s who could no longer earn a living?

Tomorrow: McCoffee – The Real Grounds

(Most of the data for this post was drawn from the Robert Wood Johnson synthesis project paper "Understanding Malpractice Insurance: A Primer," which you can find at http://www.rwjf.org/pr/synthesis/reports_and_briefs/pdf/no10_primer.pdf. The rest I found on the Kaiser Family Foundation website (http://www.kff.org/).

14 comments:

Fascinating. Being British, I know very little about the US system, though the proposed reforms have been in the news a bit lately (in very high-level terms). I'm not sure what the problem is that this limit is proposed to fix, though - is it supposed to make the medical insurance premiums cheaper?

I guess with medial mistakes I think of myself. I work in IT, I'm a good programmer - fast, efficient, quick to make decisions and generally I make the right call.

But sometimes I make the wrong call - I'm human and ultimately humans do make mistakes or errors of judgement.

Some would say "well those suckers shouldn't be surgeons or doctors" but ultimately any surgeon or doctor could make a mistake, and if they are human then they will. Some mistakes will be serious. That doesn't lesson the gravity of it, not at all, but I think that is what health insurance should be for, among other things.

I think that this would not have been included under pain and suffering, but under loss of income, which even a Christian should have the right to ask for help with. Pain and suffering are hard to demonstrate because they are not tangible losses. So tort attorneys go hog wild with them.

It's the scammers in malpractice that bug me! The good reverend did what people used to do before there was health insurance, before they could sue...Most people don't want to take ownership of their lives. Doctors and Insurance companies have been playing games for decades- and both will oppose any national health care plan proposed. When will the average taxpayer ever see their taxes spent on them?

Great post! Just to clear up a few things from someone who works in the field.

A mistake by a doctor does not automatically constitute malpractice. In order to commit malpractice the doctor has to violate the standard of care which is defined as actions "a reasonable physician in similar circumstances" would take. So if they're just doing their job and something bad happens you have to prove that it isn't just "something that can happen" when performing procedures. You also have to prove that it was the violation of the standard of care that caused the injury and not some other factor.

It's also very difficult to prove economic loss. A child that is disabled by malpractice has no income, how do you calculate economic loss? It is a contentious point and a shortcoming there can often be made up in pain and suffering awards. Capping awards will have little to no effect on healthcare costs, it is simply the insurance companies trying to further their dominance over the plaintiff's bar.

On a similar subject, here's a link to an article on the lie of defensive medicine http://www.vamedmal.com/library/the-high-cost-of-defensive-medicine.cfm